XRP Crypto Secures Legal and Regulated Status in Japan

Key Insights:

• XRP crypto makes headway in Japan after securing legal status.
• XRP faces weak liquidity flows despite being described as the hottest crypto trade of 2026 earlier this month.
• The XRP price wedge pattern suggests a major move between now and mid-March.

XRP crypto kicked off January with a lot of excitement and heavy expectations, but the XRP price action has so far cast doubt on those prospects. However, recent XRP news may be gradually building up hype around the cryptocurrency.

Japan just gifted the crypto market with the exciting XRP news to kick off the week. Its Financial Services Agency has reportedly classified XRP crypto as a regulated financial asset through the Financial Instruments and Exchange Act (FIEA).

This means XRP crypto will be considered a legal and regulated product as of Q2 2026. This change is expected to have widespread implications, especially for investor access.

The FSA’s decision means the cryptocurrency will be legally accessible to institutional investors going forward.  XRP could thus be on track to receive a significant injection of institutional liquidity from Japanese firms.

Moreover, the shift positions the XRP Ledger as a core financial infrastructure for the country’s tokenization efforts.

Rough Start for XRP Crypto Despite Heavy Expectations

XRP crypto kicked off January with some major mainstream media outlets describing it as the ultimate play for the crypto market in 2026. Those expectations were fueled by Ripple’s push in the banking system and the possibilities that the XRP ledger could become core infrastructure for the financial industry.

Those expectations initially contributed to a wave of demand earlier this month. However, the cryptocurrency recently gave up all those gains and reverted to its bottom range.

More importantly, recent data revealed weak demand for the cryptocurrency across key metrics. For example, institutional demand has declined over the last few weeks.

XRP ETFs have maintained overall positive flows since they were launched. However, the flows themselves remained relatively weak, indicating a low appeal from institutional players.

Weak ETF flows also reflected similar sentiments across the broader market. XRP outflows cooled down considerably over the last few weeks, but the cryptocurrency failed to manifest significant demand.

For context, XRP spot flows have so far had only 5 days of positive flows since the start of January. Moreover, the collective net inflows during those days amounted to $22.1 million, which was relatively low for a top 10 coin.

When Will XRP Price Break Out of Its Weak Demand Trend?

XRP price action may offer insights into what to expect moving forward. The cryptocurrency has been trading within a wedge pattern for months. Its latest retracement occurred after it interacted with the pattern’s descending resistance line.

XRP crypto previously bounced from the Wedge pattern’s lower line, which acted as the support in December last year. It almost interacted with the same support last week, courtesy of its overall downtrend since the first week of January.

XRP traded at $1.89 at press time, but the wedge pattern suggests it could retest support at $1.82. Moreover, the same wedge pattern suggests that a breakout or breakdown from this pattern may occur between now and mid-March.

It is also worth noting that XRP price action has been heavily influenced by macro factors, just as is the case with many other top coins. This means its future outcomes remain heavily influenced by external factors.